Three-quarters of Stimulus to go in 18 Months

By AP&nbsp|&nbsp

Posted: Wed 11:08 PM, Jan 21, 2009&nbsp|&nbsp

Updated: Wed 11:21 PM, Jan 21, 2009

WASHINGTON – Facing Republican resistance to a massive economic stimulus plan, the Obama administration on Wednesday said $3 of every $4 in the package should be spent within 18 months to have maximum impact on jobs and taxpayers.

In an interview with the Associated Press, Orszag responded to a Congressional Budget Office assessment that money targeted for infrastructure under a House proposal would take years to be spent. He said the issues identified by CBO could be easily corrected.

"There are relatively straightforward changes to increase the spend-out on that part of the bill," Orszag said.

CBO concluded that only $26 billion out of $358 billion in infrastructure and other appropriated spending would be delivered into the economy by the Sept. 30 end of the budget year. The CBO's analysis applied only to 40 percent of the overall stimulus bill. Still, Republicans cited the study in pushing for more tax cuts and less spending

Indeed Republicans, who said they were receptive to Obama's call for a "unity of purpose," promptly tested the day-old administration. They criticized the Democratic plan and requested a meeting with the president to air their tax-cutting plans.

Congressional officials said a meeting was planned for next week.

The maneuvers illustrated Obama's governing predicament: He wants to move swiftly to confront the troubled economy while also living up to a vow to break through the traditional partisan barriers.

A senior administration official said the group discussed the status of the markets, the stimulus package and a financial industry bailout. The official spoke on condition of anonymity because the meeting was private.

While pledging to use the money swiftly, Orszag in the interview defended the need for some spending outside the 18 month window to avoid a sudden end to the government's infusion.

"There is an important economic argument that you don't want to jump-start the economy and then create a huge air pocket at the end," he said.

Meanwhile, the chairman of the House Appropriations Committee voiced doubts about whether the package was big enough to slow or redirect the economy's downward path.

"This package is no silver bullet," the chairman, David Obey, D-Wis., cautioned. "What it is aimed at is staving off the worst aspects of this recession. ... I don't know, frankly, if it will be adequate."

Timothy Geithner, Obama's nominee for secretary of the treasury, told senators the country needs a "forceful course" to meet the economic crisis.

"The ultimate costs of this crisis will be greater if we do not act with sufficient strength now," Geithner told the Senate Finance Committee. "In a crisis of this magnitude, the most prudent course is the most forceful course."

"The challenge as we see it is to create a plan that helps middle-class taxpayers and small businesses without wasting money or exploding our national deficit," House GOP leaders wrote in a letter to the White House.

The House Appropriations Committee on Wednesday night approved by 35-22 party-line vote spending a $358 billion portion of the stimulus measure.

The sweeping plan blends traditional public works programs such as road and bridge construction and water and sewer projects with new ideas such as upgrading the nation's electricity grid and investments in health care information technology systems.

The measure contains temporary spending increases for dozens of programs across the federal government. There's money to weatherize poor people's homes, boost spending for community health centers, relieve a backlog of construction projects at national parks and purchase buses for local mass transit agencies, just for starters.

In a day when economic developments moved on several fronts, the House voted 260-166 to impose new goals and tougher restrictions on the $700 billion financial bailout fund. Half of the money from the Troubled Asset Relief Program has already been committed by the Bush administration, but Obama got permission from the Senate last week to tap the remainder.

The House legislation would devote $40 billion to $100 billion of the financial sector bailout to reducing foreclosures. It also would impose restrictions on executive pay at banks that receive the money and would require greater reporting on how the financial institutions spend the money.

Obama's economic team last week pledged to abide by many of the same provisions in the House legislation. Still, House Financial Services Chairman Barney Frank, D-Mass., said the bill would give Congress more assurance that the goals and conditions would be met.

"It's now legally theirs to spend without any constraint except for what we are able to impose on them through our efforts," Frank said before the vote.

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